Reliance aims to connect 3000 towns

Anshuman Daga

BANGALORE: The Reliance group, a late entrant into the nation's booming mobile phone sector, aims to nearly treble its market share in a year with a cut-rate service that has taken taken a fifth of the market in less than a year.

"We expect to have more than 25 million subscribers by the end of next year while the total users in the industry should be around 40 to 50 million by that time," Prakash Bajpai, president of Reliance Infocomm, told Reuters.

The unit is 45 percent owned by Reliance Industries Ltd, India's largest private sector firm.

Within 12 months of launching its Reliance Infocomm service it has won over roughly 21 percent of India's 28 million mobile users. Reliance and other fixed-line services breaking into the mobile market use CDMA technology, the dominant wireless standard in the United States and parts of Asia, while most of the established mobile competitors use the GSM standard.

Bajpai, who joined Reliance 18 months ago from smaller player Hughes Telecom, said the sector would benefit from a recent government policy allowing fixed-line service providers, using CDMA, to offer full mobile services.

Established mobile firms had objected to the government rule, having already lost $2 billion of $5 billion they'd invested in India's nine-year old mobile sector under the assumption that fixed-line firms would be allowed to offer only limited mobility.

GSM firms last week withdrew their objections to the policy after the government cut license fees for them and promised to let foreign investors own a majority stake in the companies.

"Because of the telecom wrangle, a lot of potential subscribers were sitting on the fence," Bajpai said. "We now see an opportunity to go out and win customers."

LOW RATES HELP

Reliance Infocomm's cheap services have drawn many users away from main GSM players Bharti Tele-Ventures Ltd, 16 percent owned by Singapore Telecommunications, and Hutchison Whampoa's Indian mobile phone unit.

India's call rates are among the lowest in the world, with carriers slashing charges to win users in a market that has been a bright spot for embattled global telecoms equipment makers.

Rates as low as 2.6 cents for a three-minute local call have doubled India's subscriber base in the past seven months and the number of users is expected to touch at least 100 million by 2005, about 40 percent of China's 260-million strong existing subscriber base.

The Reliance group aims to make the mobile phone a mass product in India, a nation of more than one billion people where fewer than three out of 100 people own a mobile phone compared with 20 in China and more than 60 in Europe.

Reliance has invested about $2.85 billion in a 85,000-km fibre-optic network criss-crossing the country and offers services in 700 towns and cities.

"We are on track to expand our network to cover more than 3,000 towns and cities in about a year," said Bajpai.

The group is also aggressively wooing users with high-speed mobile data services such as video downloads and Web surfing.

"This is going to be our key initiative for the next few months. We have hundreds of applications in the waiting room," said Bajpai, who listed gaming as a high-growth service.

By early 2004, Reliance plans to offer its broadband services to businesses in 30 cities. "We are doing pilot launches and have almost reached the final stage," said Bajpai.

"This involves wiring up about 200,000 buildings through which we are targetting close to a million customers," he said.

Reuters